According to the Financial Conduct Authority, new rules for people with credit cards, overdrafts and loans will come into effect at the end of the year.
The rules will replace safeguards put in place to keep people from being knocked down by debt during the first wave of the coronavirus pandemic.
These rules are due to expire in a little over a month, reports November 1st The mirror.
The latest figures show that 1,085,000 credit card postponements and 738,000 personal loan postponements were used by customers during the pandemic.
After November 1, lenders will now have to offer their customers tailored support – including the elimination of interest payments, extension of loan terms and the elimination of other fees.
Christopher Woolard, Interim General Manager of the FCA, said, “For those who can resume payments, it is in their best interests to do so.
“However, for those who are still faced with payment difficulties or are in difficulties because of new ones CoronavirusWe expect companies to provide a tailored support package that takes into account the current situation and local or national responses to the crisis.
“There shouldn’t be a one-size-fits-all approach from businesses to helping consumers get back on track.”
The guidelines apply to users of credit cards, credit card and catalog loans, personal loans, auto finance, buy-it-now, post-rental, pawnbrokers, and high-cost short-term credit products and overdrafts.
Valentine Mulholland of the Money and Pensions Service said: “If people are still struggling with their finances at the end of the payment vacation, they shouldn’t suffer in silence.”
“It’s important that they reach out to the company to find out what support they can offer and be aware that if they can’t afford it, they don’t have to agree to a repayment arrangement.”
The FCA said starting November 1, companies must:
- Recognize the uncertainties and challenges many customers will face in the months ahead as the crisis unfolds and provide tailored support that reflects their individual circumstances.
- Work with customers who are nearing the end of a suspension of payments to provide support before they miss out on payments
- Be flexible and use a wide range of shorter and longer term options to support your customers and minimize the stress and fears of customers in financial difficulties
- Give customers time and opportunity to repay rather than pressurize them to repay their debts in an inappropriately short period of time
- Introduce sustainable repayment arrangements that are affordable and take into account the general financial situation of their customers, including their other debts and essential cost of living
- Prevent customers’ credit from escalating once they have entered into a repayment agreement by suspending, reducing, canceling or canceling the interest, fees or levies required for this
- Recognize and respond to the needs of vulnerable customers
From November every new support offered will be displayed in your credit card.
The FCA said it made the change so that companies can “have an accurate picture of consumers’ finances” and help “reduce the risk of unaffordable credit”.
The FCA’s current rules, which give people the option to take a payment vacation, will remain in effect until October 31, 2020.